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(Adds CEO and Chairman comments, analyst reaction)
* Bank to ditch nearly 300-year-old RBS name
* Shares fall as dividend disappoints
* New CEO Rose to shrink investment bank
By Iain Withers and Lawrence White
LONDON, Feb 14 (Reuters) - Royal Bank of Scotland's
new Chief Executive Alison Rose unveiled a new strategy for the
taxpayer-backed bank on Friday, including radically cutting back
the size of its loss-making investment bank and renaming the
company NatWest.
Rose, who replaced former CEO Ross McEwan in November to
become the first woman to lead one of Britain's major banks, is
hoping a rebrand will help rehabilitate the lender's image after
years of scandals following a 45 billion pound taxpayer rescue
during the 2008 financial crisis.
Although the RBS brand will live on in Scotland, the bank
will stop using the 293-year-old name at group level and adopt
the NatWest brand that grew out of National Westminster Bank,
which RBS bought in 2000 and which consistently polls as more
popular in customer satisfaction surveys in Britain.
The new strategy and better-than-expected profits were,
however, overshadowed by a lower than expected eight pence
dividend, sending shares down 6% in morning trading and
demonstrating the challenge Rose faces to win over investors.
The payout will amount to 1 billion pounds, including a 600
million pound windfall for taxpayers, who still own 62% of the
bank.
RBS Chairman Howard Davies told reporters the bank's
preference was to use excess capital to buy back stock from the
government as and when it restarts selling following the March
11 budget.
Rose's strategy includes plans to halve investment bank
NatWest Markets' risk weighted assets to 20 billion pounds
($26.10 billion).
She also said making the bank greener would be a top
priority to help tackle "one of the defining issues of our
generation", following similar strategy updates by BP and
Blackrock in recent weeks.
The bank will stop financing coal power stations by 2030 and
is aiming to make its own operations carbon positive by 2025.
'HORRIBLE OUTLOOK'
Analysts took a dim view of the update, with KBW saying
there was "no end to the building site" at RBS and the outlook
was "horrible".
"We believe investors will be disappointed with capital
return," said Joe Dickerson, an analyst at Jefferies.
The lender reported pre-tax profits of 4.2 billion pounds
for 2019, 24% higher than 2018 and above analyst expectations.
But the results were dented by a loss of 121 million pounds
at NatWest Markets and a previously announced 900 million pound
provision to compensate customers mis-sold loan insurance, part
of a wider industry scandal.
Despite the planned cuts to NatWest Markets, the group
signalled it will slightly ease the overall pace of
cost-cutting, to 250 million pounds of savings this year from
307 million pounds in 2019.
However this will still likely result in further significant
job cuts, after the group cut staff numbers by 3,000 in 2019.
Rose, who started as a trainee at RBS and has worked at the
bank for more than 27 years, declined to comment on expected job
losses this year.
The bank said it would target a reduction in its core
capital buffer to 13 to 14% over the "medium to long term", down
from 16.2% in 2019, and a return on equity of 9 to 11% over the
same period after hitting 9.4% in 2019.
RBS confirmed Mark Bailie, the boss of fledgling digital
bank Bo, had quit and would leave with immediate effect, amid
investor concerns about the venture's commercial viability.
Bailie will be replaced by Marieke Flament, the boss of
digital brand Mettle, who will run both businesses.
($1 = 0.7663 pounds)
(Reporting by Iain Withers and Lawrence White
Editing by Rachel Armstrong, Kirsten Donovan)
